Socialist Studies Socialist Studies

Socialist Party of Great Britain - Capitalism In Crisis - Running Scared.

From Boom to Bust

The current economic crisis was supposed not to have happened. Nobel prize-winning economists said that crises were a thing of the past. Their mathematical equations showed that the market was stable and self-adjusting. The politicians believed them. No more “boom and bust” said the Prime Minister Gordon Brown when Chancellor of the Exchequer.

Like previous economic crises the ruling class and their political agents are running scared. Not only have they lost a lot of wealth but their core ideas and beliefs about capitalism have been shattered. Economic Liberalism is dead and buried. The market is not omnipotent. Markets fail. The allure of capitalism for the masses has been temporarily destroyed. You no longer hear politicians talking about “popular capitalism” and economists about “the joy of capitalism”.

Rising unemployment, pay cuts, enforced holidays, part-time working, and house repossessions are the order of the day. The economic pain in Britain is embraced by both the 2 million unemployed and the 27 million still in employment. Times are hard. There is discontent and questioning. There have been riots in Iceland, Hungary, Greece and other major countries and a general strike in France.

According to the BBC (22.03.09):

They were asking for more money, yes, but what they really wanted was not cash but a government with a sense of direction, with a plan for their future, for their grandchildren.

Governments do not exist to serve the interest of the working class. They are, what Marx called, “the executive of the bourgeoisie” (COMMUNIST MANIFESTO). They cannot provide direction, they cannot plan, and they cannot guarantee prosperity for future generations of workers. Capitalism will not let them. The profit system goes its own way. The only beneficiaries under capitalism are the capitalist class who own the means of production.

Instead workers should consider the socialist alternative where there would be no unemployment, labour market, wages system, class exploitation. Socialism; a society in which social production would just take place to meet human need is the only guarantee for future generations of workers. Capitalism can only give the working class unemployment, war and poverty. When employed workers are still exploited.

Running Scared

The worry of this current crisis and economic depression for the ruling class and its paid journalists can be seen in the pages of THE DAILY MAIL. It is said that after you have read the DAILY MAIL you want to do one of two things; either vote conservative or cut your throat. You should do neither. They might be running scared but workers shouldn’t be. Instead celebrate and enjoy their panic. Become a Socialist.

For years the City has been held up as a model of capitalism with its success, power and omnipotence. Money was everything. The owners of the banks were considered the masters of the universe. They were feted by Labour and Tory politicians. They could do no wrong.

Then it all went pear shape. Now the bankers are pariahs. They are hated more than the politicians. Capitalism is no longer a success story. Capitalism is now a world of rising unemployment, social pain and discomfort. Two years ago politicians, bankers, industrialists and economists met at Davos in Switzerland to praise each other on how great globalisation was with its free trade, free markets and continued growth.

Now there is incomprehension that the only winners have been the losers of other people’s capital. The Chief Executive Officers (CEO’s) have secured their wealth but have lost the shareholders’ investments. For some investors it is a return to the ranks of the working class; for the failed bankers a return to villas in the sun and yachts moored in smart marinas. Such is life under modern capitalism.

There is a fable about a frog who gives a scorpion a lift across a pond. The frog is worried about being stung but the scorpion tells him that it will never happen. Half way across the pond the scorpion stings the frog and the drown. Just before they both drown the frog asks the Scorpion why he has stung him. And the scorpion replied that it was in his nature. Under capitalism crisis happen and there is nothing politicians or economists can do to prevent them occurring. Investors lose capital and workers lose their jobs. That is the nature of capitalism just as it is in the nature of the scorpion to sting.

A Political Tightrope

Enter the journalist Stephen Glover. His brief is to simultaneously hate the bankers but love them. He and his proprietor know that readers of the DAILY MAIL are spitting blood at bankers like “Fred the Shread” (Fred Goodwin former CEO of the Royal Bank of Scotland) who enjoy their bonuses, pension funds and big pay-offs. They are worried that “the consensus in favour of free markets have come to an end”.

As Glover writes:

Fred the Shread is the epitome of everything we hate, the symbol of selfish capitalism, the author of all our woes” (THE DAILY MAIL 19.03.09).

But he tries to balance the hatred of bankers with an attack on the Labour Government. He reminds his readers:

Having rejected Socialism in the mid-Nineties, New Labour embraced casino capitalism with wide-eyed naivety”.

Labour never rejected Socialism in the mid-1990’s. They were never a Socialist political party to begin with. They have always supported the interests of British Capitalism. They have never stood for the abolition of capitalism and the establishment of the common ownership of the means of production and distribution by all of society.

And let us not forget that Socialists have been constantly lectured to by defenders of the profit system that selfishness is a virtue; self-interest a fact of human nature. Capitalism is not moral anymore than people are inherently selfish. You can no more have “selfish capitalism” than you can have the “unacceptable face” of capitalism. Capitalism is capitalism. Capitalism is a system based on class exploitation and the private ownership of the means of production. Capitalism’s essential characteristics are that it is an exploitative system with a historical beginning and end in class struggle.

Glover continues walking along his political tightrope:

Converted once from socialism to the free market, Mr Brown is veering back in the direction he came from. The man who put too much faith in markets says he no longer believes in them. “Laissez-faire has had its day”, he declares…”

Laissez-faire” might have had its day but this does not mean that Gordon Brown has given up on capitalism. His job is to defend capitalism’s interests. He wants to save capitalism (and his political career) not to end the profit system. The G20 meeting in London was to show Brown as the Messiah of a new global but regulated capitalism. Predictably it collapsed into in-fighting between national factions with world leaders looking after the interests of their own respective countries.

Whether commodity production and exchange for profit is free from government interference (and it has been regulated ever since the factory acts to save the capitalists from themselves); or it is nationalised, part nationalised or heavily regulated; it is still capitalism. And this applies to the “statsism and corporartism” of the 1970’s as it did to the free trade laissez faire capitalism of the late 19th and early 21st centuries.

All Glover can offer his readers as he falls off his political tightrope to the ground below is two propositions; first; “The City is the most productive sector” and second; “Capitalism works, and it alone can save us”.

Only the working class produce social wealth.

The City is not productive. The class which is productive is the working class.

Under capitalism the workers’ ability to work, their labour power, is sold on the labour market like any other commodity. The value of a commodity (value is not the same as price but is the underlying point around which actual prices oscillate) is determined by the amount of socially necessary labour time required in its production.

When applied to the commodity, labour power the value of labour power – its wages- is determined by the amount of labour time socially necessary to produce it, i.e. to bring-up, feed, clothe, school etc. the workers and their families so that they are able to be employed and reproduce themselves as an exploited class.

But if labour power is bought and sold like any other commodity, there is one vital respect in which it differs from all other commodities: it is productive – it produces more value than was required to produce it. The difference, what Marx called surplus value, goes to the capitalist and is the source of the unearned income of rent, interest and profit. Marx’s theory of surplus value exposes the myth that the capitalist, landlord and banker are productive. He shows the reality of capital accumulation and who does produce the social wealth. And this is the working class.

However the theory of surplus value also demonstrates that with commodity production and exchange for profit there is a diametrically opposite and irreconcilable conflict of interest between the capitalist class on the one hand and the working class on the other.

The capitalist class are forever trying to increase the intensity and extent of exploitation; what Marx called absolute surplus value. This exploitation is resisted by workers who try to gain more wages and better working conditions. Therefore, Marx wrote, wages and profits:

…stand in inverse ratio to each other. Capital’s exchange value, profit, rises in the same proportion as labour’s share, wages, falls, and vice versa. Profit rises to the extent that wages fall; it falls to the extent that wages rise… the interests of capital and the interests of wage labour are diametrically opposed”. (Karl Marx, WAGE LABOUR AND CAPITAL p36 Progress Publishersp. 36)

This is the reality of production under capitalism; class exploitation and class struggle

Who does capitalism work for?

And who does capitalism work for? The answer is simple: the likes of Lord Rothermere, the owner of the DAILY MAIL. At the age of 30 Rothermere inherited his family's controlling stake in a media empire along with a fortune of £1.3 billion. Through the ownership of the means of production the capitalist class lives a life of privilege and luxury. All from the exploitation of the working class.

Glover does not understand capitalism. For Glover capitalism makes its wealth in circulation; in the City or in Mayfair hedge funds. This is a false view. Social wealth is in fact made in production and only realised in circulation.

The economists, politicians and bankers have all lost the plot. They created an intellectually bankrupt utility theory of value in opposition to Marx’s scientific labour theory of value. They ditched the gold standard to release them from monetary discipline. They subscribed to the mystical belief that bankers could create credit at a stroke of a pen. And then they initiated decades of inflation defining money until it had no meaning in the misguided belief that Banks controlled the economy through the interest rate mechanism and politicians could guarantee no more booms and busts and full employment through a fiscal stimulus of the economy. It has left them floundering about for a cogent explanation of the current crisis and trade depression. They end up blaming each other.

This is not a problem for Socialists or the working class. It is not our system. All socialists’ state is that capitalism is anarchic, unpredictable and socially unpleasant. It can only be run in the interest of the capitalist class. Capitalism saves no one. Capitalism is a social system in which a minority privately own the means of production for their privilege and wealth. Capitalism is only about making a profit from exploiting the working class.

This does not have to remain the case. Workers can free themselves from class exploitation. They do not have to cut their throats from a misplaced pessimism about the social consequences of the anarchy of commodity production and exchange for profit. There is a revolutionary alternative. They can recognise the historically demonstrable fact that capitalism can never be run in their interests and organise consciously and politically to replace the profit system with Socialism.

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